Many companies seek additional financing while liquidity sits trapped in slow-moving inventory and overdue receivables. The difference is that financing adds cost, whereas improving the operating cycle releases cash the business already owns.
Three levers
- Receivables: segment customers by payment behaviour and tighten terms only on the late-paying tier.
- Inventory: isolate slow-moving lines and state the cost of holding them explicitly.
- Payables: renegotiate terms so they align with the actual collection cycle.
Shortening the cash conversion cycle by ten days in a company with SAR 100 million of revenue releases roughly SAR 2.7 million in cash — with no interest and no collateral.
